Kaching - The Top Stock Picking Site

Kaching - This site lists various investors who have picked a portfolio of stocks based on an original investment amount of $100,000. The site then ranks these investors based on the quality of their picks i.e. return on investment compared to risk of portfolio, and their investor knowledge, i.e. the amount of relevant analysis the individual provides for their stock picks. The site also provides information regarding the stock pickers strategy, i.e. value, growth, or industry specific, whether they have long or short positions, and the turnover of their stocks.

Overall I believe this is the best site for finding stock picks as Kaching does a great job segregating the average joe picker from the "geniuses" of the site. This one is definately worth a look for all you stock investors out there.

Speicifically on this site I have used Min Thang's analysis of the Healthcare industry and Dennis Lupastean's Energy industry in my own personal investing analysis. You can definately gain some valuable insite into various investor's thought processes and even further develop your own stock picking/investing style from what other top notch investors are doing.

5 Easy Ways to Build Your Credit Score (For Beginners)

1. Know Thy Credit Score
First step to building your credit score is know what your credit score is. To do this free of charge you can go to Annual Credit Report. You might not have heard of this site because it is not advertised on TV. This is because the sites with TV commericals and other ads all try to entice customers with hidden fees or gimmicky services, Annual Credit Report on the other hand offers you the chance to get all three of your credit reports free once a year with no gimmicks. While you can get your credit report for free, you do have to pay an additional fee to get your credit score (that three digit number that shows your credit worthiness.

2. Have Credit
This may sound self explanatory, but you would be surprised how many people believe that just paying their bills on time and not having any credit cards is the best way to have good credit. Actually the credit agencies want to see that you have credit available to you. That makes it more likely that you will pay off your debts and have alternate sources of funding in bad times. The more credit available to you, the merrier your credit score.

3.Have Credit for a Long Time
Not only is it best to have credit available to you to enhance your credit score, it is also better to not close that credit. If you have the option say to close your current $5,000 credit card and open a new card for $10,000 or keep your current card and add a second $5,000 limit, it is almost always in your interest to choose the latter. Credit agencies reward you for having a continuing credit history, rather than opening an closing credit accounts.

4.Don't Fully Utilize Your Credit
As contrary as it may sound, it is better to keep your credit cards under utilized. In fact it is suggested to keep your balances at 10-20% of your limit if possible. This shows the credit agencies that your not struggling to make ends meet and have access to additional funding if necessary. Your credit score drops as your credit limits get more fully utilized.

5.Use Multiple Funding Sources
Credit score company's also favor individual's who are able to juggle multiple sources of funding, this shows that the individual is fairly sophisticated in their understanding of personal finances. Therefore it is suggested that you at least have a checking account, savings account, credit card, and some type of loan (mortgage, car, personal, etc.).

So those are 5 ways to easily build your credit score. But remember while paying your bills on time doesn't necessarily help your credit score, not paying them on time will hurt your score.

Broker Selection - Money is Everything

One of the first and most important decisions many new stock traders will make is determing what type of stock broker to go with. The first decision is whether to go with a full service or discount broker. This should be a fairly straight forward decision for most individuals, especially those reading this blog, and the correct answer is............. DISCOUNT BROKER!!!

While most discount brokers will not give you much face to face interaction or indepth research by definition, is it really worth paying 10 to 20 times the amount per trade to get this:




Well I don't think so. Lets take this example, lets take the following 3 examples to determine how much of a difference the broker selection makes in your final earnings. The following table assumes a $10 fee per trade at a discount broker, actually somewhat high for a discount broker. It also assumes a 10% return on investment regardless of amount of trades made, which probably bias towards long-term investing, but it is just used to demonstrate an overall concept:



Amount Invested

$1,000 $10,000 $100,000

Trading Level

1 100-10 1000-10 10,000-10

10 100-100 1000-100 10,000-100

100 100-1,000 1,000-1,000 10,000-1,000



The example below shows the use of a full service broker with a fee of $100 per trade. Typically a full service broker also charges maintanence fees for accounts and depending on what their pay is based on, may attempt to have you be a more active trader to earn additional commission. Lets also give the full service broker the benefit of the doubt and give you an additional 5% return on investment, for a total return on investment of 15% (though I find this not to be the case, but again for demonstration purposes only)



Amount Invested

$1,000 $10,000 $100,000

Trading Level

1 150-100 1,500-100 15,000-100

10 150-1,000 1,500-1,000 15,000-1,000

100 150-10,000 1,500-10,000 15,000-10,000



As you can see from the above tables, only with the investor investing $100,000 does the full service brokerage outperform the discount brokerage in 2 of the 3 trading levels. In the $10,000 investment only the 1 trade situation outperforms the discount brokerage. In the $1,000 investment category the full service brokerage never outperforms the full service brokerage. Keep in mind this is using a very general example that assumes no difference in investment gain regardless of trading level and also assumes that the full service brokerage outperforms the discount brokerage in terms of investment gain.



In general the above table leads to two important conclusions. Small investors rarely benefit from the use of a full brokerage. I assume few people reading this are investing much more than $10,000 a year. Also the more active traders get significantly less return on investment by using full service brokers, in all three situations of 100 trades per year the discount brokerage out performs the full service brokerage.



Based on this analysis it can be concluded that only high net worth investors, who perform an intermediate or low range of trades should use a full service brokerage, all others would be better off with a discount brokerage. This also assumes that the high net worth investors cannot out perform or come within 5% of the return of the full service brokerage, which may be an accurate statement in some cases. But overall, an investor with an intermediate knowledge of financial investing can usually perform near the level that could be obtained from a full service brokerage. The question then becomes how much time would it take to gain said knowledge, and what is worth of the high net individuals time, which would be a calculation for another time. It would go something like this on a basic leve (static deficit of invesment compared to broker + (hours to gain sufficient financial knowledge * pay rate of individual or marginal worth of that time to the individual) - (%gain in investment performance * amount invested)).



Any basically what this comes down to is that in most cases by building your own financial investment knowledge you are able to outperform full service brokerages by using a discount broker. Therefore, when armed with the adequate level of financial knowledge the internet can provide free of charge all the information you may need to invest correctly, and thus your may objective should be to find the lowest rate brokers possible.



Below is my list of top discount brokers:



Just2Trade - cost per stock trade $2.50, minimum balance $2,500

ShareBuilder - cost per stock trade $4, minimum balance $0, ING Direct services

Scottrade - cost per stock trade $7, minimum balance $0, minimum deposit $500



These are all basically no bells and whistles brokers. Although Sharebuilder does hold the distinction of having access to ING Direct services. Scottrade also has some of the fastest transaction times in the business and holds a few more analysis tools the other recommendations. Just2Trade on the other had is for slightly more advanced traders with no hand holding, and a downside for the new and lower income investors of having to maintain a $2,500 balance.